Profits slump at Anglo American

Miner Anglo American has seen a 40pc fall in profits, as commodity prices
plunged.

Profits at miner Anglo American slumped in the first half of the year, hit by a plunge in commodity prices and soaring costs.

Anglo American

Pre-tax profits fell to $2.9bn from $6.6bn, with operating profits before one-off items slumping 38pc to £3.7bn. The results were below market expectations.

More disappointment came from a delay in one of the group’s key expansion projects – with completion of its Brazilian iron ore project Minas Rio held up for a year.

The project is now expected to start shipping ore in the second half of 2014. In April, the miner was guiding to first shipments in the second half of 2013.

“This is a negative set of results that reflects the difficulty of the macro environment due to the low cyclical growth but will also add to the concerns over the structural outlook,” Goldman Sachs said. “Anglo’s exposure to late-cycle commodities through platinum and diamonds is more of a relative weakness versus peers than a strength.”

Cynthia Carroll, Anglo’s chief executive, said that the current subdued sentiment in commodities would pass.

“Short-term prospects for the world economy have deteriorated in recent months,” Ms Carroll said, “Yet we see more resilient trends in the medium to longer term.

“Long term supply constraints across many commodities, combined with continuing industrialisation and urbanisation trends in key growth markets should provide considerable support for prices,” Ms Carroll added.

Anglo is the first UK-listed mining major to report its first-half numbers. Its shares fell 88½p, or 4.5pc, to £18.75½.